Brexit might not be all bad news for South Africa

A worst case scenario for the United Kingdom (UK) could be a boost for South African trade between the UK and the European Union (EU), a trade consultant and economist said on Wednesday.

This follows a referendum, where the UK voted to leave the European Union last Thursday.

André Gouws, a consultant to the Department of Trade and Industry, told Fin24 on the sidelines of a Brexit workshop in Cape Town a worst-case scenario will occur if the EU or UK puts up significant trading barriers that will make it more difficult to export or import goods and services between the EU and UK.

This presents an opportunity for South Africa, said Gouws.

“We can start taking markets that the British had in Europe so we need to do the research into that aspect.

“Then we need to look at the market in the UK that the Europeans have and we need to see what we can exploit from that.”

Gouws said these could provide opportunities for certain niche markets, like agro-processing, automotives and even the clothing and textiles industry.

“If most British firms can no longer export to the EU as they are doing now, that is going to be more expensive. They are going to face high external barriers and all the non-tariff barriers that the rest of the world has to face.

“South Africa fortunately has got trade agreements in place with the EU and I think that is what we need to use – that we can offer those to investors who are currently there and offer them a place in South Africa – to invest and then use our quotas and our duty-free access to get into the EU or to retain their market that they have currently got.”

Gouws said South African businesses that focus on exporting also need to lobby government to ensure it negotiates the best outcome in case a worst-case scenario occurs for the UK.

“We need to know what it is that business needs. There’s so many non-tariff barriers so it is easier to pick up the tariff barriers, but what are the non-tariff barriers and regulatory requirements that our exporters are facing right now,” he asked.

Gouws said these challenges should be discussed with the department of trade and industry so that they can start using the diplomatic channels to either reduce those non-tariff barriers or to find ways of helping South Africans to comply with the trade barriers that are in place.

In addition, he said the best case scenario for South Africa’s trade relations with the UK would be if it develops a liberalisation trade policy, as opposed to the status quo or a protectionist policy.

South Africa on June 17 signed an Economic Partnership Agreement (EPA) with the EU where exports have increased from R151bn in 2011 to R216bn in 2015.

The EPA, which was also signed by Botswana, Lesotho, Mozambique, Namibia and Swaziland, will replace the trade chapter in the bilateral agreement between the EU and South Africa, the Trade Development and Cooperation Agreement (TDCA) signed in the year 2000.

This deal will provide improved market access opportunities for South African products, including a significant improvement in quota for wine and new market access for sugar and ethanol.

The agreements still requirement parliamentary approval from the EU and the SADC countries, said Gouws.